Breaking up a Lease: How Much Is The Expected Advertisement Reimbursement to The Landlord/Agent?

uk3000 on 03/03/2021 - 13:32

We've tried and couldn't negotiate what we think is a fair offer to renew the lease for a Sydney apartment we rent.

We decide to not renew, as there currently quite a few alternative options available, offering better value for less money.

I now need to give the landlord a 14 day break-up notice, after which I'll have to pay a penalty of one extra week rent (we're past 80% of our 1yr tenancy term) and reimburse them for the "advertising and associated fees".

I wonder, what kind of reasonable $$$ figure should I expect for their "advertising and associated fees"?

Is there any regulated limit to that? Could anyone please share their experience, thank you.

Financial

Comments

  • Porker on 03/03/2021 - 13:36
    +1

    The fees will be what the real estate agency charges typically or at the time.

    I've had tenants break leases in the past and the cost paid by each was different only due to the time they were done. As in, one recently broke lease and so paid higher than one that broke 5 years earlier. Indexed fees.

    The surest answer you'll get is asking the agent what their fees are.

    • uk3000 on 03/03/2021 - 13:40

      I did ask, they are basically not replying to my emails. I'm taking matter to my own hands.

      Is it something I could expect to be under $1K?

      • Porker on 03/03/2021 - 13:43
        +1

        Well if my memory is correct, to list the property for rent through my agency was something like $99 for the web listing.

        Sign up fees for new tenants were in the order of 5% of rental. Credit check fee too was something like $20.

        I'm pretty sure that the last tenant break for me was only several $100 and under $1k. It took about 3 weeks to re-tenant for me.

        • jimbobaus on 03/03/2021 - 13:51

          Credit check fee too was something like $20.

          Do you mean the national tenancy database check?

          • Porker on 03/03/2021 - 13:52

            @jimbobaus: Sorry, not a 'credit' check but reference check or some database look up. I misspoke with 'credit'.

            • jimbobaus on 03/03/2021 - 13:53
              +1

              @Porker: Yeah i admit i did a double take… was going to ask who your agent is as checking consumer credit files is against the rules in VIC for rentals.
              The NTD was created for this reason, gives agents the ability to check on tenants history etc :) and yes i think its around $20 or so for that check.

  • MorriJ on 03/03/2021 - 13:38

    Location?

    • uk3000 on 03/03/2021 - 13:38

      Lindfield, NSW

      • MorriJ on 03/03/2021 - 13:45
        +3

        Main reason ask, is advertisement costs do vary, but not significantly. Each agency is going to be a bit different; however from my experience it would be in the $200-$400 mark for a property in that area.

        You are looking circa $200 for a realestate.com.au advertisement alone - which in many instances is enough to rent out a place during a tight market; but it's not a tight rental market at the moment.

        • uk3000 on 03/03/2021 - 13:46

          Tks. Will they keep charging me their "inspection" fees, until they let it out / the end of my lease?

          • MorriJ on 03/03/2021 - 13:50
            +1

            @uk3000: Yep; that's the sum of it unfortunately.
            You are on the line for it until they successfully let out the place at a comparable rate.

            • uk3000 on 03/03/2021 - 13:53

              @MorriJ: Thought so. In a way, I may end up getting them their next tenant for free.

              Can they eventually charge me more than I'd otherwise pay them for the remaining time on the lease?

              • dizzle on 03/03/2021 - 14:15
                +1

                @uk3000:

                Thought so. In a way, I may end up getting them their next tenant for free.

                That's the idea. You are breaking the lease early and there may be weeks that they can not get another paying tenant.

                FYI, according to Fair Trading NSW the break lease fee can also include compensation for lost rent (which they won't know how much until they can get a new tenant in)

                FairTradeNSW Break Lease Fee not in agreement
                *A landlord may still seek compensation by applying to the Tribunal.
                *These costs may include loss of rent, advertising and a letting fee if the landlord uses an agent.
                *The landlord or agent may negotiate an agreed amount of compensation with the tenant.

              • MorriJ on 03/03/2021 - 14:22
                +1

                @uk3000:

                Can they eventually charge me more than I'd otherwise pay them for the remaining time on the lease?

                No, that is not considered a reasonable cost under the legislation at that point.

                The limit you are on the hook for is your liability for the lease. It could take a few months of uncertainty if they are struggling to lease it as your costs would go up, but they can only claim what you would have owed in paying out the lease anyway.

      • ihbh on 03/03/2021 - 14:38
        +1

        Great to hear you took the advice you sought on where to rent or buy in Sydney. How have you found it?

        • uk3000 on 03/03/2021 - 15:25

          Thanks, nice you remember. Apparently, we've missed the bullet train of Sydney real-estate prosperity :) Other than that, Sydney has a lot to offer, I've met some very interesting people here and made new friends. I still miss our pastoral Adelaidean lifestyle and homeownership times, but we believe that was a necessary move to make.

  • TheMindsetTraveller on 03/03/2021 - 13:46

    What does your tenancy agreement state?

    • uk3000 on 03/03/2021 - 13:50

      Edit: sorry, misunderstood the q.

    • uk3000 on 03/03/2021 - 14:12

      It states, "If you have been in the tenancy for more than 75%: 1 week’s rent", plus "any advertising costs + Internet Advertising + GST".

  • Gronk on 03/03/2021 - 13:47
    +1

    Why not just stay until the end of the term and avoid any early termination fees?

    • uk3000 on 03/03/2021 - 13:50

      Because the current rent market has a few alternatives that would suit us well, but it may all be gone in the next 10 weeks left on the lease.

      • jimbobaus on 03/03/2021 - 13:56

        Are you going to save over the next 12 m what its going to cost you to leave?

        • uk3000 on 03/03/2021 - 13:59

          Not over 12m perhaps, but this place is now nothing like what it was when we rented it. There's now an ongoing construction with lots of noise and traffic jams during peak hours, which is expected to go on for another 2yrs.

          • dizzle on 03/03/2021 - 14:22
            +1

            @uk3000: But for the sake of 2 extra months living in the current space, you'll have to pay extra to leave early. Is that worth going through the hassel.

            Also consider the references. May make it harder to rent somewhere new when you tell them (or they find out) you left the last place early because you wanted cheaper rent.

            • uk3000 on 03/03/2021 - 14:39
              +1

              @dizzle: True, but I'm not sure if I can find any reasonable alternative in 2 months. Right now I certainly can.

  • Meho2026 on 03/03/2021 - 13:58
    +1

    Would it not be so much easier just to contact the tenants union and ask them? https://www.tenants.org.au/

    • uk3000 on 03/03/2021 - 14:02

      Thanks maybe I will. I never heard of them before. First time renting.

  • Seraphin7 on 03/03/2021 - 14:11
    +1

    You need to look past the fact you've been unable "negotiate what we think is a fair offer to renew the lease". That's not relevant to where you are now.

    The relevant fact is you wish to break the lease for convenience. You obviously don't want to pay any more than you need to, but equally need to understand that there are out of pocket costs you are liable for.

    The only source of information that is directly relevant is your letting agent. One way or another, this isn't the first time they've done this and will be able to tell you what you're up for, even in a "worst case" scenario. From there, you can determine whether or not it is in your interests to break the lease, or just continue on until it expires.

    • uk3000 on 03/03/2021 - 14:16

      The relevant fact is you wish to break the lease for convenience. You obviously don't want to pay any more than you need to, but equally need to understand that there are out of pocket costs you are liable for.

      I understand that and I'm going to comply.

      That said, as I mentioned above, this place is now nothing like what it was when we rented it. There's now an ongoing construction with lots of noise, dust and traffic jams during peak hours. It's expected to go on for another 2yrs.

      I imagine, if I wanted, I could go into a dispute and claim I've lost my right to "quiet enjoyment".

      • Seraphin7 on 03/03/2021 - 14:22

        That said, as I mentioned above, this place is now nothing like what it was when we rented it. There's now an ongoing construction with lots of noise, dust and traffic jams during peak hours. It's expected to go on for another 2yrs.

        Yes, understand, but you're also 80%+ through your 1 year term. You've got no more than 10 weeks to just tough it out.

        Given you have to live somewhere for the next 10 weeks and I'll assume are going to be paying the same rent somewhere else, might it be better (cheaper) to just stay where you are for that period and therefore avoid the additional cost of one week's rent, advertising fees, etc., etc. and the attendant hassle that comes with it all?

        • uk3000 on 03/03/2021 - 14:34

          Correct. If only I knew what options are available on the market in 2 months from now, when my lease is about to expire, so I'll have only 2 weeks to rent something else.

          It's a kind of Catch-22 problem, where I have to pay more for having some choice and flexibility.

          Which is fine, but I'm trying to evaluate what option is more viable for me: break the lease and pay all the penalty fees, or just let the lease quietly expire and absorb the remaining cost.

          • Seraphin7 on 03/03/2021 - 14:56
            +1

            @uk3000: Fair enough. Only you can value your own flexibility.

            The challenge is that the actual cost is a somewhat open ended figure, depending on a range of factors including these somewhat subjective costs. I'd ultimately go back to the agent and attempt to work out what are all the events that could transpire that will put a cost on your account. Assume you'll have to pay for all of them and then you'll know where you are.

            • uk3000 on 03/03/2021 - 15:29

              @Seraphin7: Thanks for your advice. So far, the agent hasn't replied to my emails sent a week ago. At least, I take it, I shouldn't end up paying more that I'd otherwise pay them for the remaining time on the lease.

      • ihbh on 03/03/2021 - 14:42
        +1

        There's now an ongoing construction with lots of noise, dust and traffic jams during peak hours. It's expected to go on for another 2yrs.

        Hey, some of my family love stopping by for at least 30 minutes to watch the construction work. The crane driver always acknowledges them… but then they're only toddlers.

        Yeah, would be a nightmare living next to it. Are you near HF?

        • uk3000 on 03/03/2021 - 14:53

          Nope, it's LLV.

          • ihbh on 03/03/2021 - 15:13
            +1

            @uk3000: I had thought most of the construction work was done, but you learn something new every day. We will probably send the kids there after primary (currently at a unique bush school). It's a sought after public school and if you have kids, consider staying in the catchment area.

            The kids currently enjoy watching the construction at LV.

            • uk3000 on 03/03/2021 - 15:33

              @ihbh: You may want to apply early. We applied at LLV for kindy when we moved in, and they rejected our child's application without any explanations. We went on with LPS, and have no regrets so far. LPS is a great school.

              • ihbh on 04/03/2021 - 09:20

                @uk3000: Thanks. Just checked catchment maps - we're now zoned for Killara High which isn't too bad (when we bought over a decade ago, everyone was trying for a catchment area for Killara High and we were 3 houses or across the street outside!). We'll have to assess how LLV progresses and decide if we want to try to get in other than by default catchment.

                Interesting the catchment map for LLV takes into Roseville and Chatswood but misses a lot of Lindfield East of the Pacific Highway! I can understand the policy decisions because some existing high schools are very full.

                I used: https://schoolfinder.education.nsw.gov.au/

                • uk3000 on 04/03/2021 - 09:39

                  @ihbh: Things might have changed at LLV as they have been expanding (hence the construction), but in 2019 the normal catchment rules didn't even apply to them (we're just across the road). They are special in the way they are an experimental public school, both primary and high combined.

                  In hindsight, I wouldn't even try to send my kid there, unless I was sure we'd stay in the area for the whole (12?) years. I think, churning between traditional schools would be much easier for a child to handle, then going from (say) LLV to LPS.

  • jv on 03/03/2021 - 14:18
    +1

    I wonder, what kind of reasonable $$$ figure should I expect for their "advertising and associated fees"?

    Around $2,500

    • uk3000 on 03/03/2021 - 14:21

      Thanks, that'd still be better than paying them for the remaining 6 weeks.

      • jv on 03/03/2021 - 14:23
        +2

        I just made it up.
        Whatever you do, make sure you get the costs in writing, especially the max they will charge.

        • uk3000 on 03/03/2021 - 14:29

          I wouldn't be surprised if they charge that.

  • Blue Cat on 03/03/2021 - 14:31

    What is written in your contract?

    • uk3000 on 03/03/2021 - 14:38

      "If you have been in the tenancy for more than 75%: 1 week’s rent", plus "any advertising costs + Internet Advertising + GST", the latter is quite vague.

      • Blue Cat on 03/03/2021 - 14:41
        +2

        Yeah, that looks criminally vague to me. I know we are all guilty of signing contracts without reading them, let this be a lesson for you and make sure to clear up any vagueness next time.

        If you do go this route, make sure you request every single invoice relating to advertising costs, internet advertising and GST payable to justify their costs provided.

        This will make their life a bit harder and maybe they will decide "screw this" and let you go off easily… but highly unlikely…

        • uk3000 on 03/03/2021 - 15:55
          +1

          Under those circumstances two years ago, I had very little flexibility to negotiate any changes. Today, the market is quite a bit more tenant-friendly.

  • twadds on 03/03/2021 - 14:35
    +1

    Did you sign your current lease before or after 23 March 2020?

    Assuming it was after, then I believe you are only required to pay the a break fee of one week rent since more than 75% of the lease has passed. I don't think they are allowed to charge you advertising costs on top of this..

    The 14 day notice period applies if you ending the lease at the end of the fixed term, if you're breaking the lease early then giving notice is a good courtesy but not technically required.

    This all assumes that your initial lease was for a period of 3 years or less, if it was longer then different rules apply.

    • uk3000 on 03/03/2021 - 14:43

      After 23.03.20, but there was an addendum about extra break-up fees that I also signed. It mentions a formal letter that they have never sent (at least, I haven't received it).

      • twadds on 03/03/2021 - 14:59
        +3

        https://www.legislation.nsw.gov.au/view/html/inforce/current…

        Look at section 107 of the RTA, the amount of the break lease fee is mandated by the Government. You should check with the tenancy union about the extra clause that they've added.

        I'm not a lawyer but I don't think it's legal for them to charge you a higher fee than what is legislated, even if they've put it in the contract.

  • bobbified on 03/03/2021 - 14:41
    +6

    If I remember correctly, you're only the hook for a portion of the "advertising and associated" costs. So if you're 80% of the way through your lease, then they should only be charging you 20% of those costs (The theory is, when you get to the end of your lease and leave, they'll have to pay those costs anyway).

  • tsunamisurfer on 03/03/2021 - 15:10
    +1

    I thought the tenant was liable for the rent until a replacement tenant is found if breaking the lease early.

    • wizzy on 03/03/2021 - 15:32
      +3

      That law changed in NSW last year. Now the most a tenant ever has to pay is 4 weeks rent, and the number of weeks a tenant has to pay reduces as the tenant progresses through the lease. By the time the tenant is 75% of the way through the lease, the tenant only has to pay 1 weeks rent for breaking the lease early.

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